Saudi Arabia fact of the day

…the Saudi adult population will more than double in the next fifteen years, driving subsidies and other government payments to unsustainable levels. The creation of private-sector jobs is the obvious answer for a country whose government employs 70 percent of its working citizens, but the sheer numbers show the difficulty. Executing the National Transformation Plan would require the creation of six million new jobs by 2030 — more if women enter the workforce in larger numbers — and yet the 2003-13 oil boom created just one-third that many. The Kingdom’s currently aims to create 450,000 non-oil jobs before 2020, and yet it would need to create 226,000 jobs a year just to accommodate new entrants to the labor market.

Here is further discussion, via Bob Cottrell.

Comments

People say such things about Saudi Arabia all the time, yet, after decades of highly idiosyncratic rule after oil was found in their kingdom, the Saudi Houle remains strong and unchallenged.

I believe two things about Saudia Arabia:

1) The death of the Saudia government is greatly exaggerated.
2) The most potentially nation in the Saudia Arabia if oil markets totally collapse.

I believe 1) will hold for a long term but 2) will occur some time in the future. One problem with globalism and specializaton, nations are more dependent a single market good.

If there are more people, there should be more jobs to satisfy their needs. Freaking out about the difficulty of creating 226,000 jobs because the population is growing by 226,000 people per year is kind of stupid.

Have you thought this through?

The government currently employs most people.

This has been funded by oil revenue.

Oil revenue does not increase when population increases (in fact, it has been plummeting recently).

It is, in fact, possible for Saudis to get poorer. And it seems quite likely.

Depends on what is included in the word "government" when you have nationalized state business enterprises.

You probably didn't know that, or, if you did, .....

By 2030?

1) Alternatives to oil should be widely used by 2030.

2) Automation is coming to Saudi Arabia, too.

Your comments re Alternatives to oil: yes. Particularly in developing countries which currently use oil to produce electricity. Solar in villages does not require electrical transmission lines, and battery storage will deal with the nighttime and peak usage.

There's an unwritten assumption that these should all be export-focused jobs, either manufacturing or exportable services. But the short-term answer is service jobs: domestic cleaners, coffee shops, restaurants, etc. That's worked out fine for other rich countries.

OK sure, if the adult population doubles the # of people working at coffee shops and restaurants will also double as there's probably min. productivity growth in that sector is probably small or zero.

That only solves your jobs problem if you currently have everyone working at coffee shops and restaurants. The oil industry may be able to employ more people as peak oil will mean it will get tougher and tougher for Saudi Arabia to pump oil, but then what? The Saudi's do have a lot of education so with a young population literally wiping out the old, you may see a sudden and dramatic transformation.

In time their strict Islamist ideology may be seen as less a source of reactionary non-change in the Kingdom and instead be seen as a rather pathetic last gasp of the old guard that evaporates suddenly.

The effect of Wahabism is to depress the size of the population of working women and to impose some frictional costs in order to maintain certain rubrics in the interaction between men and women. It's a reasonable wager they can live with that. What they need to be doing is training more young people in the building trades, in technology and engineering, in business disciplines, and to re-work incentives which keep working aged people (and especially working aged men) at home.

These guys can take the lead among Arabic speaking countries. From producing TV content to banking, will they succeed?

Those aren't just any adults but adults raised under the austere teachings of Wahhabism.

That is going to a very large amount of indoctrinated individuals who will find their local culture uprooted if the Royal Family decides to allow the market to create jobs.

What about working as an accountant in a bank or selling insurance or working as a mason 'uproots your culture'?

"What about working as an accountant in a bank or selling insurance"
Strictly speaking, isn't Islam against charging interest? Yes, the Saudi family has succeded for now in keeping the radicals (i.e. people even more radical than them) uiet, but for how much long?

There's a long history of Sharia compliant banking in the Arab world. There are rococo substitutes for explicitly drawing usufruct. (And, I think prohibitions on interest would only affect the investment of insurance company portfolios).

Sharia complaint banking is ubiquitous in the Islamic world. It's really just a trick of definitions, what you call equity vs debt.

Saudi Arabia is in trouble, but it has nothing to do with Islam. It's in trouble because it is a rent seeking, statist economy nightmare. All roads lead to Riyadh.

Gradually reforming their economy and slowly limiting immigration would be their chance of a future. Men sitting on their asses while Faizullah from Pakistan works on the oil rig is not a smart long term move.

They'll just have to invade the Fertile Crescent again.

They need more energy jobs.

They should become energy voters.

Did you notice it's getting warmer in here.

They can always migrate to the US. Trump will be long gone by then and the US desperately needs more labour given its low birthrate.

We don't need their labor. Labor-intensive jobs are being automated.

There will always be new kinds of jobs. Besides, even if everything were to be automated we would still benefit from their diversity.

The total fertility rate in this country has bounced around a set point of 1.9 for a generation, in the context of a secular increase in life expectancy among all age groups. We're not in desperate need of labor and the fertility deficit can be supplied with an immigration pipeline of 400,000 persons per year (or less). We're currently drawing in about 3x that.

1.9 is far too low.
More people means more gross happiness.
The US is vast and has plenty of space to be filled.
How can we boast about being the most successful species on the planet when the biomass of krill surpasses us by 5x?

Well, get happy because outside of Africa and a scatter of loci elsewhere in deep poverty it's generally lower or only a shade higher. A rate of 1.9 is not optimal, but you can work with it. We won't be 'desperately in need of labor'.

The birthrate is too low in many countries because the carrying capacity is being reached. We can fix that by giving the excess population a place to immigrate. In the US the carrying capacity is not even close to having been reached but rather people are too hedonistic. This policy will allow countries like Saudi Arabia to produce more humans which will boost our gross global happiness index.

Wolf is engaged in satire, I believe

The birthrate is too low in many countries because the carrying capacity is being reached

Total fertility at replacement rates implies population stasis (in the absence of mechanical increase via immigration). We know there is adequate space and adequate infrastructure for the living generations of Frenchmen and Germans because...they are living there now and not experiencing net emigration. Let's posit that 3/4 of Germany's population lives in town. That's 60,000,000 people. At ordinary suburban densities, such a quantum of people should occupy 26,000 sq miles, or 19% of Germany's land area.

Lol at the idea of Saudis working.

Cliff thinks Wolf is engaged in satire. Sadly, I think he is sincere

Positive wishful outlook: finally an arabic brain drain the gulf states could capitalize on.
Negative more likely outlook: the biggest dumpster fire to be seen for while.

What's real and what's fake in the Arab world is never clear. I particularly enjoy watching (on television, not in person) golf tournaments (on the European tour) played in those places, scenic, bright green golf courses surrounded by new, expensive-looking homes, all in the middle of the desert. Are those homes real or fake? I've watched for hours and not once seen any signs of life in or around those homes. That Arab oil wealth funds Sunni Muslim terrorism (ISIS, al-Qaeda) is beyond doubt. Why? They should be encouraged to move into those fake houses and take up golf instead.

Saudi Arabia's indigenous population has increased by 38% in the last 15 years, while it's foreign resident population has increased by 83%. It's doubtful its total population will 'double' in 15 years. The total fertility rate is Saudi Arabia has been tanking for a generation, and if past is prologue will fall to replacement levels within a decade. The real problem in Saudi Arabia and the Gulf emirates has been a reliance on foreign labor in lieu of skill development among its indigenous labor. You have low rates of labor force participation, contextually high rates of illiteracy, and insufficient emphasis on vocational programs in the educational system.

Answer: (partial?) educate and export the educated.

Subsidize initial employments abroad, to be partial offset by remittances home.

They don't need to export their educated people. They need to educate with an eye to production and import fewer foreigners. More than a quarter of the population consists of foreign residents (modally South Asian, I believe).

I wss in Mecca and Jeddah for a few days last year, every job involving actual work was done by a harassed South Asian. The Saudis would instantly order a guest worker to sort things out when they encountered anything remotely difficult. For all the oil wealth of the country I was taken aback by how poor much of the outskirts of Mecca looked. The cab ride from Mecca to Jeddah was like whizzing through the surface of the moon, nothing to see but empty desolation and floating plastic bags. It got to the point that flying to Lahore in Pakistan felt like I was re-entering a developed country.

S.A. is a deeply screwed country. Their native workforce is ZMP and have been fed decades of extremism that will cause major ruptures in the not too distant future once they realise how screwed they are. It will make ISIS look like a welcoming party for a new vicar.

Thanks for your first hand account. I do think they are heading for trouble.

Great news.

If America is willing to open its borders, the saudis could be a massive boost to the economy. And to the local cousine of the DC area.

Saudi Barbaria: Descent to Hell.

I hope we get to that show sooner than later. I'll enjoy every moment.

I wonder if they will ask Hillary for a refund now that she lost.

And they are one battery breakthrough form oblivion.

And they are one battery breakthrough from oblivion. And worse yet they way the people of the rest of the world feel about Muslims these days they cannot even emigrate.

Isn't solar energy like the greatest thing since sliced bread? They can put acres of solar cells out in the desert.

I guess Europe didn't get the memo? If the state fails Germany will take in millions with open arms. Trillion dollar bills and all.

Saudi Arabia's economy combines high domestic youth unemployment with high numbers of foreign workers.

25-30% of the country is made up of foreign nationals, few of whom will ever become citizens.

Why look for a job when the government pays you to do nothing and foreigners take all the jobs?

These people are in for a rude awakening some day.

A fertility rate of 1.9 children per reproductive pair(please correct me if the units are something else) doesn't sound that bad. The US is near to it's largest human population ever, manual labor jobs are largely obsolete with more being obsoleted on a regular basis, child mortality is at historic lows while life expectancy is at an all time high, and we've already destroyed a significant portion of the North American wilderness to build our cities. I don't think we're anywhere near being at risk of becoming an endangered species, and if anything, letting our numbers shrink by an order of magnitude though old age and low birthrates could probably go a long way towards delaying the depletion of Earth's resources.

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